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TMI Blog1961 (3) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... terest income and his forest income in the return filed in the regular assessment. The Income Tax Officer on receipt of a return in regular assessment. The Income Tax Officer on receipt of a return in response to the notice under section 34 made a revised assessment by his order dated July 12, 1945, and imposed tax on both the forest income and the interest income. The assessee appealed and eventually his appeal came before the Income Tax Appellate Tribunal. By the time this appeal came up the assessee on longer contested the liability to tax of the interest income which had been shown by him in the return filed in response to the notice under section 34 but contested the assessment in respect of the forest income mainly on the ground that the notice in respect of it was invalid inasmuch as it had been issued without any definite information that that income had escaped assessment which was required by section 34 as it stood at that time. The Income Tax Appellate Tribunal, when deciding the appeal, examined this argument relating to the forest income and accepted the contention of the assessee that it could not be held that the Income Tax Officer had come in possession of definite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal representative pointed out in the course of arguments and when mentioning the arguments of the departmental representative the Tribunal had put down the word rightly indicating that in their opinion the argument put forward by the departmental representative was correct. That argument was that whatever proceedings were started under section 34 in April, 1945, were quashed by the Tribunal by its order dated April 25, 1949. Having mentioned this the Tribunal puts down two more sentences to the following effect : The position, therefore, was that there were no valid proceedings at all. The assessee failed to disclose the interest income in his return filed under section 22(2) in connection with the original assessment. There was some argument before us as to whether these two sentences represent the opinion of the Tribunal and their findings or whether they were also part of the argument of the departmental representative. It appears to us that this aspect is immaterial because of the use of the word rightly by the Tribunal in the earlier sentence where they mentioned the argument of the departmental representative. Even if these sentences be treated as part of the arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal was based on the acceptance by the Tribunal of the point raised by the departmental representative that the proceedings started under section 34 in April, 1945, were quashed by the Tribunal by its order dated April 25, 1949, and consequently there were no such valid proceedings at all. This point of view recited by the Tribunal in its appellate order was irrelevant to and had no bearing on the contentions of the assessee which were mentioned by the Tribunal in the appellate order. It was urged by learned counsel for the assessee before us that these remarks were made for the purpose of meeting the ground taken in the grounds of appeal to the effect that the assessment order dated July 12, 1945, for the assessment year 1942-43 under section 23(3) read with section 34 of the Act had become final under section 33(6) of the Act and consequently the present assessment proceedings were without jurisdiction. In order to show that such a ground of appeal was taken before the Tribunal, learned counsel for the assessee put before us a copy of those grounds of appeal. Learned counsel for the department stated that he had no objection to the copy of the grounds of appeal being taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal to mention that this aspect was pressed before it in the course of arguments becomes immaterial. The contention of learned counsel for the department that we are not entitled to examine the question referred to us in this aspect on the ground that the question of law in this form does not arise out of the appellate order has, therefore, no force. On this aspect of the case, we find that the Tribunal has gone wrong. The Tribunal without carefully examining the correct position accepted the submission of the departmental representative that the proceedings started under section 34 in April, 1945, were quashed by the Tribunal by its order dated April 25, 1949. We have looked at the appellate order of the Tribunal dated April 25, 1949, and we are unable to find any words in that order quashing the proceedings which had been taken on the notice under section 34 at that time. The appellate order of the Tribunal dated April 25, 1949, shows that the Tribunal concentrated its attention on the question whether the notice under section 34, inasmuch as it affected the forest income, was or was not a valid notice. Examining that aspect in detail, the Tribunal at the end recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their subsequent appellate order dated September 7, 1953, out of which the present reference has arisen. The Tribunal has stated that the Income Tax authorities did not bring this to the notice of the Tribunal by an application under section 35 nor were any steps taken to have a case stated to the High Court under section 66(1). An application could have been presented under section 35 or proceedings initiated under section 66(1) only on the basis that the order of the Tribunal setting aside the imposition of tax on interest income was an order within the jurisdiction of the Tribunal, though an order which suffered from an error of law which could be rectified either by the Tribunal itself under section 35 or by the High Court on receipt of a reference under section 66. The order passed by the Tribunal on April 25, 1949, did not, therefore, invalidate the proceedings which were taken by issue of the notice under section 34 in April, 1945, and the Tribunal committed an error in accepting the interpretation of the departmental representative that these proceedings had been quashed and that there had been no such valid proceedings at all. There having been proceedings which were vali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not grant any such right to the department and did not specifically make the amended section retrospective. The second reason which appeals to us is that the amendment to section 34 which was brought about by the amendment of 1948 was not of such a nature as to bring about any difference between the proceedings to be taken under the amended section 34 in April, 1945, in so far as the proceedings related to this interest income. All the ingredients required for taking proceedings under section 34 in respect of this interest income which are relied upon for the issue of the notice under the amended section are the same which did exist and which were taken into account when issuing the notice under the unamended section 34. The main amendment related to the use of the words definite information in section 34. In the proceedings taken under the notice issued under the unamended section 34 in April, 1945, there was a finding that there was definite information in respect of this interest income of the nature required and that finding of fact was never set aside. The assessment of tax was, however, set aside. In the proceedings taken under the amended section, the requirement of de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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